Mr. Pawan Kumar Gupta, Delhi V. ACIT, New Delhi

ITA 4655/DEL/2011

• Counselvise Citation: 465520114 RSA 2011
• Duration Of Justice: 2 year(s) 9 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-07-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 17-07-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 21-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANOJ KUMAR CHOPRA
• Section: 143(3); 153A; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH F: NEW DELHI) BEFORE SHRI I. C. SUDHIR, JUDICIAL MEMBER AND SHRI T. S. KAPOOR, ACCOUNTANT MEMBER ITA NOS. 4652, 4653,4654, 4655/DEL/2011 (ASSESSMENT YEARS: 2004-05, 2005-06,,2006-07, 2007- 08) PAWAN KUMAR GUPTA VS. ACIT FLAT NO. 203-206, SECOND FLOOR CENTRAL CIRCLE-6 HOOVER APARTMENTS, NEW DELHI. KHASRA NO. 773 & 774, SANT NAGAR BURADI, DELHI. PAN AAEPG9014E (APPELLANT) (RESPONDENT) ASSESSEE BY :SHRI AJAY WADHWA, CA REVENUE BY :SHRI MANOJ KUMAR CHOPR A, SR. DR ORDER PER I. C. SUDHIR, JUDICIAL MEMBER: IN ALL THESE APPEALS THE ASSESSEE HAS QUES TIONED UPHOLDING OF PENALTY IMPOSED U/S 271(1) OF THE ACT BY THE LD. C IT(A). 2. THE MAIN CONTENTION OF THE LD. AR IS THAT WHE N NO CONCEALMENT WAS DETECTED BY THE REVENUE AND THE INCOME DECLARED IN THE RETURN FILED U/S 153A WAS VOLUNTARY WHICH WAS ACCEPTED AS SUCH I N THE ASSESSMENT MADE U/S 153A / 143(3) OF THE ACT, THERE WAS NO QUE STION OF LEVY OF PENALTY U/S 271(1) OF THE ACT. HE SUBMITTED FURTHE R THAT THE ISSUE ITA NOS.4652,4653,4654,4655/DEL/2011 2 RAISED IS FULLY COVERED IN FAVOUR OF THE ASSESSEE I N ALMOST SIMILAR FACTS BY THE FOLLOWING DECISIONS :- I) PREM ARORA VS. DCIT (2012) 24 TAXMAN.CO M 260 (DELHI II) NEERAJ LAL T. GALE\A (HUF) VS. ACIT (20 13) 33 TAXMAN. COM 620 (MUMBAI) III) SUMAN RAJEJA VS. DCIT ITA NO. 4411 AND 4412/DEL/2011 (ASSTT. YEARS 2-001-02 AND 2002-03 ORDER DATED 2 5.5.2012 IV) NUTAN GUPTA VS. DCIT ITA 4728 TO 4731/DE L/2011 (ASSTT.YEARS 2001-02 TO 2006-07) ORDER DATED 24.8.201 2 V) SHRI KIRAN SHAH VS. ACIT ITA NOS. 5919 T O 5925/MUMBAI/2011 FOR ASSTT. YAER 1999-200 TO 2005-06 ORDER DATED 8.1.2014 3. LD. DR ON THE OTHER HAND PLACED RELIANCE ON THE ORDERS OF THE AUTHORITIES BELOW AND THE DECISIONS RELIED UPON BY THEM. HE SUBMITTED THAT IT IS AN ADMITTED FACT IN ALL THESE APPEALS TH AT ONLY AFTER THE SEARCH CONDUCTED THE ASSESSEE DISCLOSED ITS INCOME REVEALE D DURING THE COURSE OF SEARCH. 4. IN VIEW OF ABOVE SUBMISSIONS AND THE DECIS IONS RELIED UPON, WE HAVE CONSIDERED THE ORDERS OF THE AUTHORITIES BELOW . THE RELEVANT FACTS ARE THAT THE HOOVER BUILDERS (P) LTD. WAS CARRYING ON THE BUSINESS OF CONSTRUCTING AND SALE OF FLATS. THE AO OBSERVED DUR ING ASSESSMENT PROCEEDINGS THAT THE ASSESSEE HAD NOT DISCLOSED THE CORRECT INCOME IN ITA NOS.4652,4653,4654,4655/DEL/2011 3 THE RETURN FILED ON 29.9.2004 WITH ITO WARD 12 (4) AS HE HAS DECLARED AN INCOME OF RS. 2,10,000/- IN THE ASSTT. YEARS 200 4-05, RS. 3 LAC IN THE ASSTT. YEAR 2005-06 RS. 5,55,746/- AND RS. 2,41,56 0/- WAS DEMANDED FOR ASSTT. YEAR 2007-08 HENCE SUBSEQUENT TO THE SEA RCH CARRIED OUT AT THE PREMISES OF THE ASSESEE, THE ASSESEE FILED ITS RETURN U/S 153A SHOWING AN INCOME OF RS. 3,35,000/- INCLUDING AN I NCOME OF RS. 1,25,000/- FROM UNDISCLOSED SOURCES FOR THE ASSTT. YEAR 2004-05, IN ASSTT YEAR 2005-06 IT SHOWED INCOME OF RS. 22 LACS WHICH INCLUDED AN INCOME OF RS. 19 LAC FROM UNDISCLOSED SOURCES IN ASSTT. YE AR 2006-07 IT SHOWED AN INCOME OF RS. 18,62,746/- WHICH INCLUDED UNDISCL OSED INCOME OF RS. 12,75,000/-. IN ASSTT. YEAR 2007-08 IT RETURNED INC OME OF RS. 8,18,320/- WAS ACCEPTED IN THE ASSESSMENT FRAMED U/S 143(3) AN D DISALLOWANCE OF RS. 15,000/- WAS MADE OUT OF THE PAYMENT MADE TO TH E CREDITORS. IN ALL THESE YEARS ASSTT. U/S 153A / 143(3) WERE FRAMED ON THE INCOME UNDISCLOSED BY THE ASSESSEE IN ITS RETURN OF INCOME FILED IN RESPONSE TO THE NOTICE ISSUED U/S 153A OF THE ACT. DURING THE C OURSE OF APPELLATE PROCEEDINGS IT WAS EXPLAINED BY THE ASSESEE THAT BY HOOVER BUILDING (P) LTD. FLATS ARE SOLD IN FINISHED AND SEMI FINISHED C ONDITIONS. FINISHED FLATS ARE STANDARDISED. SOME CUSTOMERS HAD PURCHASED SEMI FINISHED FLATS AND WANTED EXTRA WORK FOR FINISHING. IN ORDER TO MA INTAIN CUSTOMERS RELATIONS AND GOOD WILL AND ALSO TO PROVIDE SERVICE S WITH THE UNDERLYING ITA NOS.4652,4653,4654,4655/DEL/2011 4 OBJECTIVE OF SELLING THE FLATS THE SAID WORK FOR TH E CUSTOMERS ON NO PROFIT NO LOSS BASIS HAS TO BE UNDERTAKEN. MONEY ARE RECEI VED FROM THE CUSTOMERS FOR THE PURPOSE OF FINISHING ACCORDING TO THEIR SATISFACTIONS AND THE ENTIRE AMOUNT IS SPENT FOR ON THE SAID JOB. THIS IS AN ADDITIONAL SERVICE WHICH IS BEING PROVIDED IN ORDER TO BOOST S ALES OF THE FLATS. IT WAS EXPLAINED THAT THIS ACTIVITY WAS BEING CARRIED ON BY ONE OF THE DIRECTORS MR. P.K. GUPTA ON AN INDIVIDUAL BASIS SIN CE THERE WAS NO PROFIT FROM THIS ACTIVITY, NO INCOME FROM THE SAME WAS SHO WN IN THE ORIGINAL RETURNS. BUT NOW HE HIMSELF HAS OFFERED TO TAX SUO MOTO VOLUNTARILY AND PRIOR TO ANY QUERY IN THE MATTER, NET AMOUNT APPEAR ING IN THE SEIZED MATERIAL ( RECEIPT LESS EXPENSES SO STATED) EVEN TH OUGH THE SAME AMOUNTS ARE MERE SCRIBBLING TO WHICH NO MEANING CAN BE DESCRIBED IN THE ABSENCE OF ANY CORROBORATIVE EVIDENCE TO SUPPO RT OF THE SAME. IT WAS ACCORDINGLY SUBMITTED THAT THE INCOME RETURNED MAY BE ACCEPTED WITHOUT ANY PENAL ACTION SINCE THE SAME IS VOLUNTAR Y AND BONAFIDE AND HAS BEEN DECLARED EVEN THOUGH THERE IS NO EVIDENCE OF THE SAME HAVING BEING EARNED. PENAL PROCEEDINGS WERE INITIATED AND THE AO LEVIED PENALTY U/S 271(1) OF THE ACT ON THE DECLARED UNDI SCLOSED INCOME. THE LD. CIT(A) HAS ALSO JUSTIFIED THE ACTION OF THE AO SAYING THAT THE CASE OF THE ASSESSEE FALLS WITHIN THE GENERAL PROVISIONS OF SECTION 271(1)(C) AS WELL AS WITHIN THE EXPLANATION 5 THEREOF. WE FIND T HAT AN IDENTICAL ISSUE ITA NOS.4652,4653,4654,4655/DEL/2011 5 WAS RAISED BEFORE DELHI BENCH OF THE TRIBUNAL IN TH E CASE OF PREM ARORA VS. DCIT(SUPRA) WHEREIN AFTER DISCUSSING RELATED P ROVISIONS IN DETAIL, THE TRIBUNAL HAS COME TO THE CONCLUSION THAT FOR THE PU RPOSE OF IMPOSITION OF PENALTY U/S 271(1)(C) AS A RESULT OF SEARCH ASSE SSMENTS MADE U /S 153A, ORIGINAL RETURN OF INCOME FILED U/S 139 CANNO T BE CONSIDERED. IT WAS HELD THAT CONCEALMENT OF INCOME HAS TO BE SEEN WITH REFERENCE TO ADDITIONAL INCOME BROUGHT TO TAX OVER AND ABOVE THE INCOME RETURNED BY THE ASSESEE IN RESPONSE TO NOTICE ISSUED U/S 153A A ND THEREFORE ONCE RETURN OF INCOME U/S 153A IS ACCEPTED BY AO, IT CAN NEITHER BE A CASE OF CONCEALMENT OF INCOME NOR FURNISHING OF INACCURATE PARTICULARS OF SUCH INCOME. IN THAT CASE SEARCH WAS CONDUCTED ON 22.11. 2006 AND CASH WAS FOUND FROM POSSESSION OF THE ASSESSEE. THE ASSESSEE HAS DRAWN CASH FLOW STATEMENT FOR ENTIRE PERIOD OF 6 YEARS IN ORDE R TO DETERMINATION OF UNDISCLOSED INCOME BASED ON SEIZED MATERIAL FOR EAC H OF SIX ASSESSMENT YEARS. THE QUESTION RAISED BEFORE THE TRIBUNAL WAS AS TO WHETHER PENALTY U/S 271(1)(C) CANNOT BE IMPOSED BY INVOKING EXPLANATION 5 IN ASSTT. YEAR 2004-05 IN RESPECT OF CASH FOUND IN PRE VIOUS YEAR RELEVANT TO ASSTT. YEARS 2007-08, MERELY ON PRESUMPTION THAT AS SESSEE MIGHT HAVE BEEN IN POSSESSION OF CASH THROUGHOUT PERIOD COVERE D BY SEARCH ASSESSMENTS. IT WAS ANSWERED IN AFFIRMATIVE I.E. IN FAVOUR OF THE ASSESSEE. THE TRIBUNAL HELD FURTHER THAT THE WORD PENDING OCCURRING IN ITA NOS.4652,4653,4654,4655/DEL/2011 6 THE SECOND PROVISO TO SECTION 153A AND WORDS ALL O THER PROVISIONS OF THIS ACT SHALL APPLY TO THE ASSESSMENT MADE UNDER T HIS SECTION AS OCCURRING IN (EXPLANATION I) TO SECTION 153A OF THE INCOME TAX ACT 1961. SIMILAR VIEW HAS BEEN EXPRESSED BY THE OTHER COORDI NATE BENCHES OF THE TRIBUNAL IN THE ABOVE CITED CASES BY THE LD. AR. RE SPECTFULLY FOLLOWING THE ABOVE DECISIONS WE FIND THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN UPHOLDING THE PENALTY LEVIED BY THE AO IN THE PRESE NT CASE WHEREIN RETURNED UNDISCLOSED INCOME IN RESPONSE TO THE NOTI CE ISSUED U/S 153A WAS ACCEPTED BY THE AO IN THE ASSESSMENT FRAMED U/S 153A / 143(3) OF THE ACT. WE THUS WHILE SETTING ASIDE ORDERS OF THE AUTHORITIES BELOW DIRECT THE AO TO DELETE THE PENALTY IN QUESTION LEV IED IN THE YEARS IN APPEALS. THE GROUND IS ACCORDINGLY ALLOWED IN FAVOU R OF THE ASSESSEE. IN THE RESULT APPEALS ARE ALLOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 25 TH JULY, 2014. SD/- SD/- (T.S. KAPOOR) ( I.C. SUDHIR ) ACCOUNTANT MEMBER J UDICIAL MEMBER DATE 25 TH JULY, 2014 *VEENA COPY OF ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT ITA NOS.4652,4653,4654,4655/DEL/2011 7 5. DR BY ORDER ASSTT. REGISTRAR, ITAT